From the CEO

February 15, 2018

HEADING INTO 110TH YEAR OF OPERATIONS WITH AN ORDER BOOK OF EUR 110 MILLION

Our strong performance continued also towards the of the year 2017. In the final quarter of the year, we received new orders worth more than EUR 60 million. When considering without our major new-capacity projects, the fourth quarter of 2017 was one of the best in the company's history. And even as our net sales approached nearly EUR 40 million in the fourth quarter, our order book continued to grow, and we reached a record level of EUR 110 million. Our operating profit of EUR 3.3 million also nicely reflects the level of our operations.

We have reason to be pleased with our full-year performance, too. Thanks to a good opening order book and active market situation, we reached a new record in our net sales, with 31 percent growth. In terms of the amount of orders received, we fell just short of last year's record high, but we can still be pleased with the EUR 155 million we achieved. Our operating profit of EUR 11.6 million in 2017 is Raute's all-time best.

The positive general economic trend that carried throughout 2017 accelerated towards year-end, despite the sustained uncertainty caused by political tensions. The drive to implement investments also grew. For Raute, this was reflected as growth in demand in North America and Russia, and, in Europe, as a stronger relative share for Southern Europe. The strengthening of South America's and Asia's economies towards the end of the year did not yet translate into new orders for us.

Major new-capacity projects again played an important role in our order intake, in both the fourth quarter and the full year. A clearly larger proportion of our orders stemmed from mid-sized replacement and improvement investments and modernizations than before. This shows that our customers' situation and confidence in the future are good. In addition to mill projects, we proved our competitiveness both to our new customers and in smaller-scale projects.

We continued with our strong focus on improving the competitiveness of our products and operations. We complemented our offering in April with the acquisition of Metriguard Inc's veneer and lumber grading technology business. It was Raute's first business acquisition in more than ten years. Alongside these new developments, we increased our investments in product development, our production capacity, quality and our employees' competence. The number of our personnel also increased, this time mainly in Finland.

We can thank our main unit in Nastola, in particular, for our growth in net sales and thus our improved result. Our measures to boost the production capacity were highly successful. Our focus on quality and on developing our operations could be seen not only in our successful delivery capabilities, but also in our ability to carry out start-ups according to plan. The success of our machine vision and measuring technology continued.

Raute turns 110 this year. We will celebrate this major milestone by keeping up the good work. We kicked off the year with a record-high order book, and 2018 already looks promising in terms of new orders. This means we can be confident that our positive development will continue and we will retain the high net sales and operating profit that we have achieved. We will, of course, still target improvements through our development projects and investments. We have scheduled our record-high order book in a way that will enable us to continue to provide competitive delivery schedules to our customers in smaller-scale projects and services. In 2018, we are especially focusing on emerging markets, where we have set our sights on finding a back-up for industrialized markets when demand there begins to level off. In terms of larger new projects, we are already turning our gaze towards 2019.

I would like to express my sincerest thanks for the past year to everyone who made our success possible: to Raute's customers for their invaluable cooperation and trust, to our personnel for their outstanding work and strong commitment to executing major workloads, to our shareholders for their continued confidence in us, and to all our other partners for the part they played in furthering Raute's development and success.